You may be mentally ready to leave home, but financially? That’s another story. Luckily, there are many ways to save money so you can fly the coop when the time comes.
Financial Foundations
Before you move out, there are a few basic moves you should consider.
1. Open a Bank Account
If you don’t already have a bank account in your name, it’s time to get one. A checking account allows you to get a debit or credit card, and a savings account makes saving money automatic.
You can set up your checking account to automatically transfer a percentage of your funds to your savings account each month. Or, set up your direct deposit through your job to automatically deposit part of each paycheck into your savings account. Your savings will start growing in no time.
2. Build Up Your Credit
Good credit will allow you to make large purchases, like a down payment on a house, an unexpected mechanic bill or a dental appointment, and pay it off over time. To get good credit, you’ll need to get a credit card and start using it for small purchases.
For example, use your credit card only for groceries or gas. Every month, pay it off on the due date, and your credit score will rise. You can become an authorized user on someone else’s credit card account — like your parents’ account — if you need help getting started.
3. Create a Budget
Your budget is your roadmap to living on your own. Without one, you might find yourself making several small purchases that add up over time, and you’ll wonder where your money went. Create a budget to help guide your financial decisions.
Building a Nest Egg
Now that you have the basics covered, here are some ways to grow your savings.
1. Buy Generic Brands
Do you really need name-brand cereal? Often, generic brands sell the exact same product at a lower price. Make an effort to find less expensive versions of your favorite things. This goes for many medications, too, which are often available in both generic and branded form.
2. Cancel Subscriptions
If you’re still living at home, you’re probably sharing many of your parents’ subscriptions for things like Netflix, Amazon Prime or Spotify. So, don’t pay for any more. Wait until you’re living on your own to open your own accounts. Subscription fees add up quickly because they’re easy to forget about.
3. Eat at Home
The average American earning $15,000 a year spent $1,388 on restaurant food in 2021. That’s 9.25% of their total income! While you’re living at home, take time to cook with your family and pack premade lunches for school and work.
4. Sell Extra Items
That electric guitar you never play? Sell it. How about your clothes that don’t fit quite right, last year’s textbooks and vintage jewelry you can’t remember wearing? Sell them all and make some extra cash.
5. Look for Deals
There are so many ways to buy things for less:
- Whenever you can, shop sales.
- Use coupons.
- Buy items in bulk if it reduces the overall cost.
- Ask about student discounts.
- Rent or buy used items in good condition.
- As long as the product is still intact, look for mark-downs due to damaged packaging.
6. Budget With Cash
Want an easy way to stay within your budget? First, use a financial calculator to decide exactly how much you want to save. Then, set aside specific amounts of cash in envelopes and use it to make purchases. Once an envelope is empty, you’ve used your whole budget for that week or month.
7. Set Short-Term Goals
It’s easier to save money by setting short-term goals. For example, instead of saying that you’ll save $500 a month, commit to saving around $17 a day. It’s the same amount, but it feels more attainable.
Use the 50/30/20 plan to help set your goals. You should aim to spend 50% of your income on needs, 30% on wants and 20% on savings.
8. Implement the 24-Hour Rule
Make yourself wait a full 24 hours before buying any unnecessary items. In fact, you may want to wait even longer. This self-imposed delay makes it easier to avoid impulse purchases.
9. Use Autopay
To ensure you always pay your bills on time, set up automatic electronic payments. That way you’ll avoid late fees. This technique is especially useful for paying credit card bills because it builds your credit score over time.
10. Find Free Entertainment
Want to attend a music festival? Volunteer and get in for free. Want to watch a movie that just came out? Wait for it to become available on your streaming service. In the meantime, rent older movies from the library. Some libraries even let you access tools like sewing machines or 3D printers, and many offer free classes.
Laying the Groundwork
Living with your parents is a very common way to save money, especially among teens and young adults — in fact, it’s the norm. But it’s a good idea to start budgeting and saving before you’re completely ready to move out. If you get a head start, you’ll have a better chance of finding your own place when the time comes.
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